The insurance industry has asked the sector's regulator to look into measures to contain the impact of pandemics over the medium and long term.
Among the moves made, discussions are currently underway on the need to extend the maximum duration of distribution of provisions for profit sharing, currently set at three years only, an insurance source told EcoActu.ma.
The provision for profit sharing helps insurers to deal with financial uncertainties and regulatory constraints. It allows insurers to "smoothen" their annual financial results over several years in order to provide the policyholder with satisfactory benefits over a long period.
The COVID-19 pandemic has caused turnover in the insurance sector to fall, and by extension, both technical and non-technical results. Industry players feel that it is time for the insurance sector to think about a system to cover operating losses.
The regulator, the Insurance and Social Insurance Supervisory Authority (ACAPS) played the role of firefighter last year in handling the impact of the pandemic by temporarily modifying certain prudential provisions, in particular those relating to financial market risk and default risk. The goal was to help insurance companies maintain their low-cost investment position in terms of capital and provisions and therefore strengthen the resilience of the sector to the shocks caused by COVID-19.
The manager of an insurance company said, "These short-term measures, adopted to cushion the impact of the stock market crash on the balance sheets of insurance companies and prevent panic, are certainly beneficial but their scope is very limited in duration.”
The COVID-19 pandemic has also affected adversely other economic sectors, particularly the tourism sector, where certain risks are not covered by insurance.
"The interruption of business activities and the cancellation of events are among the main risks that professionals had to face due to the absence and/or scarcity of cover for this type of risk," said an insurance executive.
Insurers and experts are looking for solutions so that economic activity can pick up as soon as possible. The crisis still exists and with the appearance of new variants of COVID-19, no one knows what tomorrow will bring.
In an interview with EcoActu.ma, Mr Hassan Boubrik, ACAPS president, referring to pandemics, said, “We must already, like for Nat CAT, think about mechanisms involving the state, the insurance sector and international reinsurance to provide coverage solutions adapted to the future.”